Singapore Bond Sales Leap to Three Month High as UniCredit Comes

By Tanya Angerer and Sonia Sirletti -
Jan 21, 2013

Bond sales in Singapore had their
busiest week in three months as Italy’s biggest bank chose the
island-state’s currency to raise debt.

UniCredit SpA (UCG) sold S$300 million ($244 million) of 10-year
notes priced to yield 5.5 percent on Jan. 16, its debut issue in
a Southeast Asian currency, according to data compiled by
Bloomberg. Borrowers sold S$1.2 billion of debt last week, the
most since S$1.4 billion was issued in the seven days ended Oct.
21, the data show.

The bond market in Singapore, one of only eight countries
with a top AAA rating and stable outlook from all three major
global ratings companies, surged 46 percent last year to a
record S$31.2 billion, Bloomberg data show. The jump surpassed
the 35 percent increase in offerings to $80 billion by all
members of the Association of Southeast Asian Nations, the data
show.

“We opted for Singapore dollar issuance to build our
presence in Asia, which is important for us to diversify our
funding sources,” said Waleed El Amir, the Milan-based head of
strategic funding at UniCredit. “We opened the market for other
people and expect that given the success of our deal, there will
be other issues that can follow.”

Notes sold in the island’s currency returned 3.1 percent in
the past year versus 2.3 percent for Thailand and 4 percent for
Malaysia, HSBC Holdings Plc local-currency indexes show. That
compares with a return of 2.2 percent that investors earned on
U.S. Treasuries, Bank of America Merrill Lynch indexes show.

‘No Premium’

UniCredit is paying a coupon of 6.95 percent on 1.5 billion
euros of notes due 2022 which it sold in October, and 250
million euros of similar-maturity debt issued last month,
according to data compiled by Bloomberg.

“We issued at the same level as our 10-year bullets and
secondaries in Italy, so we paid no premium to access” the
Singapore market, UniCredit’s El Amir said. “Comparing the two
issuances -- the one in euros made last year for a 10-year
bullet and this one -- the Singapore dollar issuance is slightly
cheaper.”

ICICI Bank Ltd. sold its largest Singapore dollar-
denominated bond earlier this month, pricing its S$225 million
of notes due January 2020 at 3.65 percent, Bloomberg-compiled
data show. The Mumbai-based lender last issued bonds in the
island’s currency in April 2011.

The number of non-Singaporean banks helping to arrange more
than one percent of the island’s bond sales has risen to 10 in
2012 from five in 2008, the data show.

“More new issuers, especially foreigners, will tap the
market now,” said Clifford Lee, the head of fixed-income at DBS
Bank Ltd., the top-ranked arranger of Singapore dollar bonds
since 2009. “Previously they were all waiting and seeing,
thinking they wouldn’t come to an experimental market. Now the
verdict is out that this market is real and can support
meaningful issuances.”